Trade in Commodities and Business Cycle Volatility

David Kohn, Fernando Leibovici and Håkon Tretvoll

No 2018-5, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper studies the role of differences in the patterns of production and international trade on the business cycle volatility of emerging and developed economies. We study a multi-sector small open economy in which firms produce and trade commodities and manufactures. We estimate the model to match key cross-sectional and time-series differences across countries. Emerging economies run trade surpluses in commodities and trade deficits in manufactures, while sectoral trade flows are balanced in developed economies. We find that these differences amplify the response of emerging economies to commodity price fluctuations. We show evidence consistent with this mechanism using cross-country data.

Keywords: International business cycles; output volatility; emerging economies (search for similar items in EconPapers)
JEL-codes: E32 F4 F41 F44 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2018-07-10
New Economics Papers: this item is included in nep-dge, nep-int, nep-mac and nep-opm
Note: Publisher DOI: https://doi.org/10.1257/mac.20180131
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in American Economic Journal-Macroeconomics

Downloads: (external link)
https://files.stlouisfed.org/files/htdocs/wp/2018/2018-005.pdf Full text (application/pdf)
https://doi.org/10.20955/wp.2018.005 https://doi.org/10.20955/wp.2018.005 (text/html)

Related works:
Journal Article: Trade in Commodities and Business Cycle Volatility (2021)
Working Paper: Trade in Commodities and Emerging Market Business Cycles (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2018-005

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2018.005

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().